Include these four strategic goals to optimize your supplier relationship management strategy to cut costs, mitigate risk, streamline operations and extract more value from suppliers.
Managing your organization’s suppliers is a time- and labor-intensive process that has a direct impact on the bottom line. Whether your organization takes a strategic approach to supplier relationship management (SRM) or opts for a more static, maintenance-style approach is based on your organization’s long-term goals, values and business objectives.
What is Supplier Relationship Management?
Supplier relationship management is the strategic practice of managing your organization’s suppliers. For many organizations, cutting costs, streamlining operations and maximizing efficiency are all top priorities, but if your organization is still relying on a manual process to onboard new suppliers, update existing supplier information and run reports, then you’re not only losing market share, but also a competitive edge.
There is not a supplier relationship management tool on the market that can replace a good SRM strategy; the two must complement each other and work in tandem. In the event of a supplier disruption, recall, or other risk event, the ability to shift resources quickly will ensure business continuity that minimizes impacts to the organization or a domino effect of supply chain disruptions.
If you’re in the exploratory phase to advance your organization’s SRM strategy with software that is easy to use, integrates with your existing ERP and software, and gives you a 360-degree view of your suppliers, then consider including the following four strategic goals in your SRM strategy.
Strategic Goal #1: Identify Strategic Partnerships
Segmenting and categorizing your suppliers based on opportunities and risks will help you determine which suppliers to engage as strategic partners. If supplier information is scattered across databases, you’ll miss out on opportunities to collaborate. Cloud-based software allows stakeholders to communicate more effectively with each other, so a systematic approach can be developed to initiate and manage partnerships.
Keeping all supplier data in a single repository saves money in the long run by improving efficiency, reducing unnecessary work, and maintaining compliance. It also allows for quick access to supplier data, such as supplier questionnaires and supplier scorecards to stay on top of KPIs, contract commitments, and more.
Strategic Goal #2: Track and Monitor
Your SBM software should include a comprehensive dashboard that allows for ongoing monitoring of compliance, sustainability, and operational risks. Being able to predict or get ahead of supply chain disruptions is the ideal scenario – and a trait of world-class procurement teams – and the ability to pivot when disruption strikes is just as important.
Every minute that your team is bumbling through outdated supplier information or searching through endless tabs on an Excel spreadsheet, you risk losing market share. Instead, you need all your supplier information housed in one repository with advanced search, filtering and reporting that updates in real-time.
Strategic Goal #3: Automate
Automation frees up your procurement team to focus on more strategic business objectives instead of getting bogged down in menial assignments. Examples of tasks that can be automated include:
- Supplier onboarding/registration
- Vendor screening
- Performance scorecards
- Supplier communications
- RFx process
Automation also reduces costly mistakes such as duplicate entries, redundancies, and payment errors while decreasing the time it takes to pay vendors (more on that below). Identifying tasks for automation will streamline business processes, minimize risk and reduce maverick spending.
Strategic Goal #4: Be a Customer of Choice
Doing business with your organization should be as straightforward as possible. Your suppliers will appreciate that you are not wasting their time and it will make you a customer of choice. Making suppliers responsible for managing their own profiles, including updating certifications, files, contract information, and other data provides better visibility into your suppliers’ performance and eliminates time in the decision-making process.
Taking these measures helps deliver greater value to your suppliers in the form of timely payments, open communication and avoiding unnecessary work, with the end result being increased collaboration and supplier innovation.
Turn the Corner
Today’s world-class procurement organizations are moving to the front of the pack by constantly optimizing their supplier relationships to extract long-term, sustainable value through strategic partnerships, automation, enhanced monitoring and compliance, and driving efficiency.
If you want to turn the corner in your organization, contact us or book a meeting with our consultants for more information on how to create a strategy and select an SBM tool that meets business objectives so your organization can glide smoothly on calm seas and ride high through any disruption.